|Good morning, readers! Clearly you—and 113 million people—were as pumped about the elections as we were. This year’s midterms had the highest voter turnout in 50 years. While election coverage—and the ongoing ballot counting in Georgia, Florida, and Arizona—are occupying the majority of media attention this week, here’s what our team is tracking in healthcare:|
►DRUG PRICING & DONATIONS: INVESTING IN ONGOING SCRUNTINY
Last month, STAT reported that Patients for Affordable Drugs—the national advocacy organization funded by drug pricing activists John and Laura Arnold—was spending millions in non-competitive Congressional races “to send a message” to candidates who accept pharma industry donations—even though they wouldn’t be able to influence the election outcome. That piece got us wondering where the Arnolds, the primary benefactors of P4AD and ICER, allocated the rest of their 2018 campaign donations.
A review of campaign donations by John and Laura Arnold found that the couple spent more than $1 million this election cycle. Among the biggest recipients were funds associated with New Jersey Democrats, where a Republican hasn’t won a Senate seat since 1972, and a SuperPAC in support of a Pennsylvania Democrat who did not win his primary race. They also gave tens of thousands of dollars to the campaigns of drug pricing hawks Senators Claire McCaskill (D-MO) and Heidi Heitkamp (D-ND), both of whom failed their re-election bids.
Meanwhile, the SuperPAC affiliated with Patients for Affordable Drugs spent the majority of its $7.8 million in U.S. Senate races where the outcome seemed relatively certain, like the re-election of Rep. Anna Eshoo in California. Of their spending, $3.3 million was on ads against Republican U.S. Senate candidate and former Celgene CEO Bob Hugin, and another $1.1 million against Delaware Democrat Tom Carper. Those races were decided by 10 and 30 points, respectively.
So what do donations to failed opponents in “safe” races mean? These activists care more about sending a message than winning. By drawing attention to candidates’ pharma ties, these groups aim to impact public opinion and draw into question the allegiances of these candidates long after the elections end. They may also be sending a warning to industry advocates in Congress: beware of accepting pharma support, or face well-funding opponents in future cycles.
►A $4M THERAPY? SHOW US THE QALYS
Novartis thinks its investigational one-time gene therapy for spinal muscular atrophy (SMA) may be worth up to $4 million per patient—a figure that would set the record as highest priced drug in the world. In clinical trials, AVXS-101 is looking promising for patients with type 1 SMA—a debilitating muscle-wasting disease that can be fatal in as little as two years. Approximately 1,300 patients in the U.S. have with SMA type 1—which could mean up to $5 billion in revenue at a $4 million price point.
So why talk million dollar price tags in the current political environment? Novartis did the math: based on a 10-year cost effectiveness set, AVXS-101 delivers a QALY of 13.3 at $4 million price point. In contrast to this one-time treatment, Biogen’s Spinraza (nusinersen), the first approved treatment for SMA costs $750K in the first year and $375K every year thereafter (or $2.25M over 5 years).
As much of the coverage speculates, whether AVXS-101 is worth $4M may be less the question than whether it’s possible to charge that amount—or anywhere close to it—in the current political environment. Pricing watchdog ICER estimated that 10% of Americans have rare diseases cause by genetic defects. With million-dollar price tags, treating even 1% of the population with gene therapies could cost as much as $3 trillion. Even Novartis noted that it would “have to get creative” in developing its value proposition if and when AVXS-101 is ultimately approved.
What’s most interesting to us is the fact the Novartis is already talking about pricing well before approval—and positioning a list price relative to QALY, a widely used (yet much criticized) measurement of cost effectiveness. Novartis took a similar strategy with CAR-T Kymriah by asking U.K.’s NICE to evaluate the drug is advance of its FDA approval. We predict pre-PDUFA and approval communications of gene therapies increasingly will provide details around cost effectiveness, as well as scientific advancement, as a means of shifting the reimbursement conversation from annualized thinking based on health coverage to a more patient-centric discussion of lifetime benefits of durable treatments.
►MARKETING UNDER A MICROSCOPE
Marketing practices in cancer care and nonprofits are finding themselves under scrutiny, with recent reports calling out Cancer Treatment Centers of America (CTCA) and the American Cancer Society (ACS) for misleading partnerships and ad campaigns. A Truth in Advertising (TINA) report found that CTCA’s $69M outlay in 2017 made it the year’s biggest cancer-center spender. The same report also flagged 130 of CTCA’s emotional ads as deceptive. Featuring long-time survivors of cancers with low 5-year survival rates, the ads quickly showed a small disclaimer saying that no case is typical. But TINA says CTCA should have done more to clearly and conspicuously indicate that these results were atypical, and they've filed a complaint with the FTC to force CTCA and other cancer centers to disclose in their ads what the generally expected outcomes really are.
On the nonprofit side, the chief medical officer of the ACS has resigned, and sources say it’s because he was “dismayed” over the charity’s partnerships with companies like Herbalife and Long John Silvers. Herbalife, which has had some run-ins with the FTC and FDA, features the ACS logo on its Facebook page and sells water bottles co-branded with the ACS logo. As traditional fundraising at the ACS has declined, the organization finds itself relying on its commercial partners—then having to defend these partnerships as critical to its mission. Ethicists, however, argue that partnerships like this undermine the charity's integrity, and it seems like the ACS's former CMO agreed.
There’s an old adage (or perhaps its the Kardashian family crest?): “All publicity is good publicity.” But that isn’t necessarily true in healthcare, where organizations from hospitals to specialty societies to pharmacos must insulate against bad publicity with proactive reputation building (Check out TWTW's take on a recent Times article about Regeneron). And acting compliantly with the law and consistently with internal values is critical to maintaining public trust (and avoiding scrutiny in Washington).
And to close out cool, interesting news of the week, watch this and be amazed.
Researchers studied beatboxers performing in MRI scanners and saw that the artists used parts of the mouth not used in language, a discovery that could have implications for language learning and production. Oh, and try to resist the urge to beatbox at your desk...
The Reputation & Risk Management Practice